Robust RK Field Still Offers Choice,
Flexibility

June 20, 2002 (PLANSPONSOR.com) - After years of
weaning and winnowing out unprofitable and undercommitted
providers, today's recordkeeping field still offers plan
sponsors a robust choice of funds, providers and
capabilities.

Some are focused on specific niches within the market,
others are able to field credible offerings in multiple
venues, and still others appear to have morphed in creative
ways to accommodate their own strengths and the market’s
needs.

And yet that very depth and breadth of offering presents
plan sponsors with something of a Hobson’s choice. Not long
ago, a plan sponsor, particularly one armed with a good
RFP, could eliminate a number of providers by posing one or
two key functionality questions that were designed to sort
the wheat from the chaff.

Analysis of the 2002 PLANSPONSOR Recordkeeping Survey
reveals a great deal about the state of the industry and
its progress. Yet selecting and evaluating a provider,
still remains challenging. As the title suggests, finding a
fit is perhaps more complicated and daunting than ever.

All for One?

Take the key area of participant and plan sponsor
services. Some 90% of the respondents to our annual survey
now offer online loan modeling and initiation, transfers
and deferral changes, savings calculators and investment
education. All offer account balance lookup. And
while only two-thirds offer online withdrawals and
distributions, taken in total, 82% of the 75 dominant
providers offer these services to ALL plan sponsors – and
only 11% charge an additional fee for them.

The picture is only slightly less overwhelming when it
comes to plan sponsor services. Some 95% offer plan summary
information, while more than 80% offer some level of plan
demographic, vesting data, and customized reporting
capabilities. A comparable number support
contribution transmissions, and roughly two-thirds already
offer account aggregation. More than 80% offer these
services to all clients, and fewer than one in ten charge
an additional fee.

Slicing and Dicing

Fidelity topped the list of recordkeepers, both in terms
of assets ($476 billion) and participants (9,500,000),
roughly twice the size on both counts as runner-up
CitiStreet ($184 billion in assets and 5,055,422
participants). Hewitt occupied the number three slot
in both rankings, while Merrill Lynch was fifth in
both. Vanguard was fourth in terms of assets, but
just seventh in terms of participants, while MetLife, which
came in fourth in terms of participants, was sixth in terms
of assets.

In terms of clients, Nationwide topped the chart, buoyed
by a large number of individual 403(b) accounts, while ING
and Principal were not far behind. Even here,
Fidelity was a strong fourth place.

Hewitt’s focus on larger plans gave it the top slot when
ranked by average recordkeeping assets per plan ($1.28
billion) and participants per plan (nearly 31,000),
dwarfing the competition. Northern Trust’s nearly
$225 million in assets and 9,300 participant average came
in next, followed by SunGard.

However, in the lucrative average assets per participant
category, Fifth Third has managed to garner plans with an
average balance of nearly $60,000. Close behind are JP
Morgan/American Century and Pacific Retirement.
Fidelity was fourth, with an average participant balance of
about $50,000.